NQ: Intel and Amazon Drag Tech Down 2.4%, ECI at 1:30 p.m. in Focus

Key Takeaways

• December NQ is down about 2.4% at midday. Around 11:20 a.m. Paris time, it is trading near 28,858, 704 points below Thursday's close. Two reports from last night are sending tech lower for a second straight session: Intel's guidance and Amazon's double miss. The S&P 500 contract is falling much less (-1.1%) and the Dow is flat (-0.04%). The selling is therefore concentrated in Nasdaq megacaps.
• Intel (INTC) is down 20% to 26% after hours. The company guided Q4 revenue to $15-16B, versus $17B expected. Other chip stocks followed last night: AMD (AMD) about -8%, Broadcom (AVGO) -4%, Nvidia (NVDA) -3%. This is the main drag on the SOX heading into the open.
• Amazon (AMZN) is down about 7% premarket. EPS came in at $1.89 versus $1.97 expected, and revenue at $201.9B versus $202.25B. Q4 guidance ($240-247B) brackets the $244.5B forecast without clearly beating it. This decline comes on top of Alphabet (GOOGL), which plunged 12.6% Thursday, its worst session ever.
• Oil stays above $115. Brent is up 1.6% at $116.70 after strikes claimed by Yemen's Houthis against Saudi oil facilities. Oil this expensive keeps inflation elevated and sustains the risk of a Fed rate hike.
• The Employment Cost Index (ECI) is due at 1:30 p.m., with a 0.8% forecast. The market is pricing about a 75% chance of a Fed hike on December 9 (CME FedWatch). The 10-year at about 4.94%, a seven-week low, is cushioning the drop for now.

Watch the schedule: Europe switched to winter time on Sunday, but the US has not yet. This week, the US cash session therefore opens at 2:30 p.m. (Paris time) and closes at 9:00 p.m.

Overnight and Europe

Asia.

• The Nikkei fell 2.12% to 63,290. Japanese semiconductor-related stocks were hit hardest.
• South Korea's Kospi dropped 3.48% to 5,731. The market triggered a temporary halt on sell orders.
• The Hang Seng is the exception at about +1.5%, lifted by energy.
• The Shanghai Composite lost about 1.4% and is headed for a 12th straight weekly decline.
• The Bank of Japan held its rate at 1.25%. The vote was 8-1: board member Hajime Takata wanted to raise it to 1.5%. The bank considers its 2% inflation target achieved and is setting up a December hike.

Europe. The decline is moderate because European indexes have little tech weighting.

• The Euro Stoxx 50 is down about 0.6% to 0.8%, near 6,160.
• The DAX is down 0.4% at 25,912 in early trading.
• The CAC 40 is flat (+0.03% at 7,973).
• The Stoxx 600 Technology index fell 1.9% at the open.
• French harmonized inflation for October came in at 3.8% year over year, versus 3.6% expected.

What has changed since Thursday's close. On Thursday, the Nasdaq Composite fell 1.4% to 26,184.72, while the S&P 500 lost 0.3% and the Dow 0.3%. Yet breadth was fairly positive: on the NYSE, advancers outnumbered decliners nearly two to one, and health care (+2.4%) and real estate (+2.2%) both gained. The decline therefore came from the largest caps. This morning, they are again the drag: Amazon, then semiconductors.

The dynamic is the same in both cases. Tech giants are spending enormous sums on AI, but the market no longer rewards that spending if revenue doesn't keep pace. Alphabet posted negative free cash flow; Amazon missed targets in online retail and advertising.

Today's Calendar

The ECI is the most important data point today. Context:

• On Thursday, Q3 GDP grew at a 3.4% annualized rate, versus 3.2% expected.
• September PCE inflation rose 0.5% month over month (3.6% year over year). Excluding food and energy, it rose 0.3% versus 0.4% expected (3.1% year over year).
• Weekly jobless claims fell to 194,000.

A sharp rise in wages would confirm inflation that isn't limited to energy. The market would then move toward a Fed that keeps hiking, which is negative for growth stocks already weakened by earnings.

Fed and Rates

On Wednesday, the Fed held its policy rate at 3.75% to 4.00%, after raising it in September. Two of the twelve voters wanted another 0.25-point hike. Fed Chair Kevin Warsh noted a tightening of financial conditions since September, without giving guidance on next steps.

The remarks from Mary Daly (5:00 p.m.) and Alberto Musalem (5:30 p.m.) will be the first from Fed officials since that decision. They will show whether the December hike is already considered a done deal.

• CME FedWatch: about a 75% chance of a 0.25-point hike on December 9. The figure had reached 85% right after Wednesday's decision.
• US 10-year: about 4.94%, flat on the day and at a seven-week low. Capital is moving into government bonds.
• US 2-year: 4.61%, flat.

Takeaway: the easing in long-term yields helps a bit, but it isn't enough to offset an earnings-driven decline. If the ECI pushes the 10-year back toward 5%, NQ loses that support.

Earnings

Amazon. The cloud delivered: AWS grew 39% to $45.98B, its fastest growth in nearly five years. The rest disappointed:

• online retail: $68.47B versus $69.6B expected;
• advertising: $19.6B;
• trailing twelve-month free cash flow of -$42.4B;
• 2026 capex expected around $220B.

Amazon is one of the index's heaviest weights: a 7% drop alone knocks dozens of points off NQ. AWS's strength, however, limits contagion to AI infrastructure suppliers.

Intel. The past quarter was good, but the guidance was not. Server chips ($7.3B versus $6.6B expected) and the foundry business for third parties ($6.7B) beat expectations. PC chips, however, disappointed ($8.1B versus $8.8B). Intel cites two explanations:

• CFO David Zinsner sees the PC slowdown lasting at least through the first half of 2027;
• a deadly explosion at a plant in Israel will cost about $300M in Q4.

Intel's weight in the index is modest. The real risk is contagion to the SOX: AMD, Nvidia and Broadcom are already falling. The message is mixed, though, since AI-driven server chip demand remains strong. Selective buying of AI chips would therefore be a sign of strength.

Alphabet and Fortinet (FTNT). They reported Wednesday evening and drove Thursday's session. At Alphabet:

• search: $63.4B versus $64.9B expected;
• free cash flow: -$9.1B;
• cloud: revenue doubled to $30.7B.

Fortinet (-20.1%) cut its full-year services revenue guidance.

Next big event: Apple (AAPL) reports Monday, November 2, after the close. The stock closed Thursday at $348.91 (+1.5%), less than 1% from its record. For now, Apple is serving as a safe haven among megacaps.

Geopolitics and Conflicts

War with Iran and Houthi strikes on Saudi Arabia

• Actors: United States, Iran, Tehran-aligned Houthis in Yemen, Saudi Arabia.
• Latest development: on Thursday, the Houthis claimed attacks on the Ras Tanura refinery, the kingdom's largest, on the Rabigh refinery and on a site at Abqaiq. They also targeted King Khalid Airport in Riyadh. Riyadh has not confirmed. The Houthis had already claimed a strike on Ras Tanura on Tuesday.
• Market channel: energy, then inflation and the Fed. Brent is up 74% year over year and has held above $110 for weeks, which sustains rising prices and the Fed's bias toward further hikes.

Israel: semiconductor production

• Actors: Intel and its Israeli manufacturing site.
• Latest development: a deadly explosion at the plant, unrelated to the war, will reduce Intel's delivery capacity in Q4.
• Market channel: semiconductor supply. This is an Intel-specific risk, with no expected effect on competitors' production.

United States: November 3 midterm elections

• Actors: Democratic and Republican parties, Congress.
• Latest development: the vote takes place next Tuesday.
• Market channel: risk appetite. Some investors may reduce positions ahead of the weekend and the vote.

Oil and Commodities

• Brent: +1.6% at $116.70 a barrel.
• WTI: +1.5% to +2%, between $103.5 and $104.
• Today's driver: the threat to Saudi facilities, on top of the war with Iran. Oil has gained about 10% in a month.
• Gold: -0.9% at $3,995, below $4,000. This isn't a pure safe-haven reflex: bonds are capturing the demand for safety.

Index impact: oil above $115 keeps inflation high, as September PCE showed (+0.5% month over month). It also makes a December hike more likely. For NQ, this limits the drop in long-term yields that growth stocks would need to rebound. A new confirmed strike on Saudi facilities would also push inflation expectations higher.

Dollar and Volatility

• Dollar (DXY): about 101.75, slightly lower (-0.1% to -0.3%).
• EUR/USD: 1.1187 (+0.06%).
• USD/JPY: 157.44 (-0.17%). The yen is firming a bit after the Bank of Japan's message.
• VIX: 18.44, up 7.2% from 17.20 at Thursday's close.
• Bitcoin: -3.7% near $77,200.

Takeaway: the dollar remains calm, so there is no broad flight to safety. The VIX stays below 20 even as NQ falls more than 2%: the stress is concentrated in tech.

Session Watch Points

1. 1:30 p.m., ECI. A print of 1.0% or higher would push up the 2-year and 10-year, adding rate pressure to earnings pressure. At 0.7% or below, lower yields could limit the decline.
2. 2:30 p.m., open. Watch whether Amazon and Intel extend their losses in the cash session or whether buyers absorb the selling. How Nvidia and Broadcom trade in the first hour will show whether contagion to the SOX is confirmed.
3. 2:45 p.m., Chicago PMI. A secondary factor, via rates.
4. Sector rotation. A renewed rally in health care and real estate while megacap tech falls would again make NQ underperform the Dow.
5. 5:00-5:30 p.m., Daly then Musalem. Remarks endorsing a December hike would make the session tougher. An emphasis on the tightening already done by the market, like Kevin Warsh's on Wednesday, would ease rates.
6. Oil, all session. Saudi confirmation of damage at Ras Tanura or Abqaiq would lift Brent and yields.
7. Late session, until 9:00 p.m. Last day of October and the eve of a weekend ahead of the November 3 elections and Apple's earnings on Monday. Rebalancing flows and precautionary selling can amplify moves into the close.

What would confirm the morning's bearish tone: a hotter-than-expected ECI, contagion hitting Nvidia and Broadcom in the cash session, and Brent above $117. What would soften it: a moderate ECI, the 10-year dropping below 4.90%, and AI chips decoupling from Intel.